Dynamics of trade negotiation

Negotiation is a process involving two or more persons of equal or unequal power meeting to discuss common and or opposed interests in relation to a particular area of mutual interest.

Usually negotiation has three dimensions Firstly, it is an educational process, which enlightens the other side about one’s concerns, perceptions and aspirations, Secondly, negotiation is a problem solving process, where the parties involved have different perspectives that must be reconciled, if process is to be achieved. Thirdly, it is an independent process, workable and sustainable progress depending on building cooperative relationship with the other side. So negotiation involves balancing of competing interests through combination of direct and indirect diplomacy, discussion, consultation, compromise, concession and flexibility.

Conflict is the core element in negotiation as different interest groups are involved in relation to the area under discussion. The conflict is conditioned by substantive, psychological and procedural requirements of both sides. However, this conflict is not destructive in any way, rather it promotes communication and allows parties to redefine old, unworkable relationships to establish new one. So through discussion reconciliation is made, thereby legitimizing the conflict.

Negotiation involves power, power is the capacity to realise a desired outcome or to change the stance of another party. Negotiation involves parties with different resources and capabilities. The ability to utilise these differences in the exercise of power depends on the political economical and social context involving negotiations. In most cases, parties with greater resources and influence may realise their objectives. So power dynamics play a vital role in negotiating workable solution.

Interest based negotiation should be the most appropriate negotiation strategy in case of financial negotiation. This type of negotiation creates a problem-solving environment and lays ground for future cooperation by emphasising the importance of creating trust based relationship. This strategy is based on four principles separate the people from the problems, focus on interests as opposed to positions, generate a variety of possibilities and use of objective criteria.

Positional strategy is opposite to interest based strategy. Individuals view the negotiating process as a struggle between two opposing positions the objective of which is to bring the other side to a position more compatible with your own at minimal cost. This strategy defines a position and tries to maintain that throughout the negotiation process.

This strategy is inappropriate in financial negotiations due to its emphasis on struggle instead of cooperation. In positional negotiation you are committed to a position which is difficult to change, the end result is a solution which is difficult to change,the end result is a solution, which is opposite to revolving interests. This approach becomes a waste of resources, energy and time when there is an improvement in position of both the parties.

However Interest strategy is more focused than positional one as it is easier to reconcile that positions. Positions can be realised through more than one process. Interests reflect substantive, emotional and procedural requirements of a final position which provides a basis of solution. So it is accessory to identify and legitimize interests of all parties in the negotiating process. But interests are difficult to identity as they may be implicit sometime. To facilitate cooperation it is important to show that you are not only open but also flexible to their concerns. So be hard on the problem but soft on the people.

Interest based strategy is to (i)Focus on the merits of the problem and the interests of the parties (ii)Generate a variety of possible solutions to the problem.

(iii) Incorporate the use of objective and scientific criteria;(iv)Focus on creating a cooperative, problem solving environment.(v)Attempt to build trust based relations for future cooperation.

The preparation in a negotiation is one if the most important phases in the negotiation process. The degree of preparation will determine the outcome of any negotiation. In this regard, members thoroughness and effective involvement are very important. Adequate preparation helps the negotiation by placing him in a better position to listen critically, respond creatively and act decisively. It also reduces risks and allows negotiations to lead rather than merely react to events. To have effective preparation there is a need to prepare a thorough brief. The purpose of the brief is to understand the subject matter under negotiation in general, and issue in detail. Obtain and analyze all relevant information providing overview of the subject, analysis of how last negotiation proceeded and understanding of economic, political and social environmental conditions. Establish your interests and define your position ( consultation be held with relevant parties, both Government and non-government and internal consultation among members of the team in informal meetings in a casual environment once an idea develops from the meeting in needs to be analyzed and criticised to develop it in greater detail. Devise strategy: Identify potential problems and look for best alternative to negotiated agreement. To establish best alternative team should develop a possible list of negotiated approach and select the most appropriate one.

Negotiation itself involves opening the Negotiation and developing the agenda, remember poor communication means poor negotiation. So clarity is a must in all negotiation. To do so establish rules and procedures explicitly and follow the procedure. While opening the formal negotiations. It is better to describe the background of the issue, what one hopes to achieve and the interests and position involved. It will be realism with a touch of optimism. Then develop the agenda including the areas sequence of discussion and the specific issues of importance. This is needed to introduce the subject and how the negotiation is expected to proceed.

In negotiation, it is important to accommodate the concerns of the other side. So active listening and flexibility should be part of negotiation at all times. Team leader needs to be empowered to respond to changing situation. While negotiation are on note down the points of consensus and difference, evidence used and how position changer. This helps to record progress ask questions and seek advice where confusion or problems arise. Avoid absolute statements, final positions and deadlines, because they entrap people in position where from it becomes difficult to come out

During the Final Agreement do not be intimidated by the other side. Negotiate as much as possible under the given situation. Remember that there is always room to negotiate despite inflexibility. Resist as far as possible pressure to curtail negotiation prematurely.

Abandon positions, if required, to build consensus around points of mutual interest. Scrutinize the draft agreement thoroughly to make sure that there are no surprises. In the final agreement, maximum gain at minimum costs for both sides should be the objective, make final agreement as easy as possible for both sides to accept. So agreement should be based on objective and scientific criteria, independent of the will of both sides.

Finally in pursuing negotiation, it is important to maintain a flexible posture, a willingness to listen listen and a willingness to pursue a range of alternatives. Proper pre-negotiation preparation is essential to pursuing successful negotiation. However, this is generally not feasible, given that most negotiating teams are thrown together on short notice. This leaves inadeq1uate time to gather and analyze information, to coordinate efforts with other relevant agencies and to recruit competent professional able to deal with the technical nature of the negotiation. Many are unwilling to pursue long drawn negotiations for a combination of reasons, including the feeling that they are in a relatively weaker position and so lack bargaining power, indifference to obtaining the best possible deal, and a lack of perceived alternatives; and there is a general feeling of distrust that donors are unwilling to compromise and will seek to expand their sphere of influence without regard to the needs of the recipient country.

The writer is former Director General, EPB.